Viisage to Acquire Firm With Fingerprinting Expertise

Helicopter News On Dec 1, 2005
Source: via NewsEdge Corporation

Viisage [VISG] recently said it plans to acquire Integrated Biometric
Technology (IBT), a software firm specializing in fingerprinting services and
solutions to federal, state and commercial customers, in a $60 million deal that
would allow Viisage to package more complete biometric solutions for its
customers.

"Identity solutions that combine leading face recognition and fingerprint
solutions with high security credentialing technologies are increasingly in
demand," Bernard Bailey, president and CEO of Viisage, said in a statement. "The
addition of IBT's expertise in fingerprinting solutions to our existing identity
solutions platform is expected to be a very attractive solution for both
existing and prospective customers. By combining our two companies' valuable
management resources and assets at the federal and state level, along with IBT's
penetration into the financial services sector, we believe we are clearly
positioning Viisage to achieve sustainable long-term growth."

Currently Viisage's key capabilities are in facial recognition software
and solutions, document authentication technology and secure credentials such as
drivers' licenses and passports.

The deal would also give Viisage access to a new customer, the
Transportation Security Administration, which last year awarded IBT a multi-
million dollar contract that could ultimately be worth over $100 million. Under
the contract IBT has deployed a network of electronic fingerprint capture
devices throughout the U.S. to process applicants and provide criminal
background checks and screening for drivers in 34 states seeking hazardous
materials transportation licenses.

IBT was considered a "dark horse" when it won the TSA contract over two
larger competitors last year and the agency is "extremely pleased" with the
company's execution on the contract so far, Robert LaPenta, chairman and CEO of
L-1 Investment Partners, which is providing the initial capital for the
acquisition, said on a conference call with Viisage's management.

The government estimates a backlog of about 2.7 million hazardous
materials drivers that need to be processes for licenses, he said. Currently IBT
is processing about 15,000 applicants per month and will soon be increasing that
amount, he said.

Moreover, LaPenta said the contract also offers the potential to be
leveraged in other TSA programs such as the Transportation Worker Identification
Credential and the Registered Traveler Program. IBT's core capability is in
software that it co-owns with Lockheed Martin [LMT], which is a subcontractor on
the TSA contract, and has full use of, he said.

The acquisition would also expand Viisage's relationships with a number
of state motor vehicle departments.

Moreover, the three largest U.S. banks are IBT customers.IBT's software
solutions are interoperable with back end databases currently in use, such as
the FBI's Integrated Automated Fingerprint Identification System, Viisage said.

The acquisition will be completed through a combination of cash and
stock, although L-1 will make a $35 million cash down payment for IBT. Once L-
1's investment in Viisage is completed, which is expected in mid-December,
Viisage would pay back L-1 the price of the down payment and issue five million
new shares of its stock, worth about $25 million, to complete the IBT purchase.

IBT has done about $15 million in sales so far this year and Viisage
expects it to bring in between $30 million and $35 million next year based upon
existing contracts.

The deal is expected to add two to three cents earnings per share to
Viisage next year as well. IBT is profitable and has no debt, LaPenta said.

The price of the deal is about nine to 10 times IBT's estimated earnings
before interest, taxes, depreciation and amortization next year, he said.

Of L-1's $100 million investment in Viisage, which gives it a 28 percent
stake in the company, $85 million is for acquisitions. After the IBT deal
closes, Viisage will still have $50 million for additional deals.

LaPenta, who will be Viisage's new chairman once L-1's investment is
approved, said on the call that he has looked at over 75 companies in the
identity solutions space and there a "number that warrant further
consideration."